Jury rules against Toshiba in flash memory dispute

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Toshiba Corp. and a subsidiary were ordered on Wednesday to pay
Lexar Media Inc. more than $380 million in damages for pursuing a
flash memory development deal with Lexar while secretly planning to
partner with a rival.

A Santa Clara County jury found Toshiba liable for a breach of
fiduciary duty and theft of trade secrets related to the memory
technology used in digital cameras, music players and other
gadgets. The panel will consider punitive damages.

In the lawsuit first filed in 2002, Lexar claimed its secrets
were misappropriated when then-partner Toshiba entered into a deal
with SanDisk, another memory chip maker and Lexar's biggest
competitor. At the time, Toshiba had a representative on Lexar's
board.

"This verdict validates Lexar's core intellectual property and
contributions to the flash memory industry," said Eric Whitaker,
Lexar's general counsel. "It holds Toshiba accountable for its
conduct - building Lexar's trust to acquire our technology and
then betraying that trust to partner with our competitor and
compete against us."

A spokeswoman for Toshiba America Electronic Components did not
return a telephone call seeking comment on Wednesday.

"It sends a clear message to Toshiba that this type of corporate
conduct will not be tolerated - as a strategic partner and
board member, Toshiba was required to act with the utmost good
faith and fell far short of that standard," Whitaker said.

Lexar, which is also pursuing patent infringement claims in
federal court, intends to seek an injunction that would bar the
sale of Toshiba products in the United States, according to a Lexar
statement. A hearing on post-trial motions is scheduled for April
13.